Supreme Court Backs DRI Officers' Powers, Restores Notices Worth Over Rs 20,000 Crore

The Supreme Court held that officers of the Directorate of Revenue Intelligence have the power to issue show cause notices for recovery of customs dues under the Customs Act, 1962.

In doing so, the apex court has reviewed its own verdict from 2021 and has said that the verdict in question did not consider the statutory scheme properly in clipping the wings of DRI officers to recover customs dues.

The ruling is slated to revive notices to the tune of over Rs 20,000 crore against companies such as Godrej & Boyce Manufacturing Ltd., Sony India Pvt., Vedanta Ltd., Vodafone Idea Ltd., and many more.

The top court held that the 2021 ruling was 'erroneous' and had a huge bearing on notices issued by DRI officers, who are actually 'proper officers' for the purposes of the Act.

Given the substantial revenue involved, it is quite probable that recovery notices will be issued to businesses, said Smita Singh, partner at S&A Law Offices.

With the issue of jurisdiction now settled in favour of the revenue authorities, such notices, at different stages of litigation, get a new lease of life, V Lakshmikumaran, founder & managing partner at Lakshmikumaran & Sridharan Attorneys, told NDTV Profit.

In 2021, a three-judge bench of the top court held that in the absence of an explicit charge to perform a duty under the Customs Act 1962, an officer of the Directorate of Revenue Intelligence will not have jurisdiction to exercise the functions entrusted to customs officers under the provisions of the Act.

In essence, the court held that DRI officers will not come under the definition of a 'proper officer' for the Act's purposes.

In doing so, the court struck down show cause notices issued by DRI officers under the Act.

However, a review petition was filed against this verdict of the court, and a three-judge bench led by CJI DY Chandrachud decided to take it up for a hearing in open court.

In a detailed hearing spanning four days, the customs department argued that the 2021 verdict had several errors apparent on the face of it and said that the customs department and the DRI have been part of the Ministry of Finance since their inception, barring a brief period of seven years, and their officers form a class of officers under the law.